IT budgeting

Smart management not cheap management

As business managers, we all care about reducing costs and maximizing profit, we look for ways to acquire assets at the lowest possible cost. One of my clients who I do consulting work for have the habit of buying used supplies including computers. He gives me a lot of work trying to fix his network that runs on old used computers. I asked him many times why he keeps buying old computers while by spending few hundreds extra dollars he can get himself new computers? He said “I run an insurance company and most of the time my staff uses the computers only to fill forms online, I don’t need new computers with extra features that I will never use.”

I understand his reasoning, but I also understand that old machines will keep breaking and his maintenance bill will keep going up.

This client has many offices that I do network and computer maintenance work for, so one day I told him “lets start buying new computers for one of your offices and see how this will reduce your maintenance cost”, he agreed and we got new computers for that particular office, and the results amazed him, his maintenance and network support calls for that office went to almost zero, and he was able to recover the cost of the new computers from the saving he made by not losing work hours due to network down time and not having to pay for network troubleshooting.

At my current consulting job, we have the same problem, some off brand computers that breaks every few days and not reliable web hosting company for our e-mail services. Now again, I am starting to clean up this company and show the management how they can save by investing in good equipment and reliable services, even if the cost is bit high, but it will pay-off later.

Rising Oil prices and cost management

The continues hike in oil prices is not going to stop anytime soon, if your business is directly affected by oil price fluctuations, it would be a wise decision to plan your budget around higher oil prices.

Many businesses, especially small businesses, may psychologically, get affected by hearing the news of higher oil prices and start to worry about their bottom line.

But as a business you got to look at your numbers. As a consultant who uses the internet and the phones extensively in his work, I saw a sharp decline in my communications bill, from almost $1000 a month to below $100 a month, that’s 90% decrease in cost.

This is only one example of how costs are dropping for other services. Having your employees work remotely from home is another example of cost saving method you can utilize, by having your employees work from home, you can cut on many types of costs associated with the office environment such as (office rent, utilities bills, commuting time, etc.)

The costs of few commodities may be rising, but the overall cost of doing business is dropping.

Reduce costs…take an inventory of your business

It’s amazing how much money a business can save by taking a detailed inventory of the business. By taking a detailed inventory I mean analyzing each aspect of doing business.

Areas where you can save money and reduce costs:
1-Employees job performance and job description reviews: having a regular meeting with employees to go over job performance and day to day activities will reveal so much to a manger, you will find what actually people doing at your company, you may think you know your employees well, but having short timely meeting with your employees will reveal to you areas which are usually overlooked in today’s dynamic work environment. You will find employees who are not doing what they were hired to do, you will find the same job done by several people, you will find abuses of company resources.
2-Renegotiate contracts with supplier and service providers: you will be surprised by how much you could save by renegotiating an old service contract. Many contracts never get regular review by management, by reviewing and renegotiating contracts on regular basis, the company could save a bundle.
3-Find cost generating areas in your company: have an intense regular review of your over all operation and watch for cost generating areas, even small cost cuts will add to savings, look for hidden areas that are usually overlooked such as (office supplies and utilities bills.)

The list can go on and on, but the general idea is to have a regular review of business operation to find areas where costs could be cut or reduced.